U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] Quarterly report under Section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended June 30, 2000
---------------------
[ ] Transition report under Section 13 or 15(d) of the exchange act of
1934 for the transition period from ______________ to ______________
COMMISSION FILE NUMBER 33-37513-D
----------------------------
GLOBAL WATER TECHNOLOGIES, INC.
--------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 84-1148204
--------------------------------- ---------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
1767 Denver West Boulevard Golden, Colorado 80401
--------------------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(Issuer's telephone number): (303) 215-1100
-------------------
NA
--------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No
--- ---
Shares of Common Stock, $0.0006 par value, outstanding as of August 11, 2000:
5,990,048.
----------
Transitional Small Business Disclosure Format Yes No X
--- ---
<PAGE>
GLOBAL WATER TECHNOLOGIES, INC. (GWTR)
INDEX
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited):
Consolidated Statements of Operations Three months and six
months ended June 30,
2000 and 1999
Consolidated Balance Sheet As of June 30, 2000 and
December 31, 1999
Consolidated Statements of Cash Flows Six months ended June 30,
2000 and 1999
Notes to Financial Statements June 30, 2000 and 1999
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II OTHER INFORMATION
Item 2. Changes in Securities and Use of Proceeds
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
<PAGE>
GLOBAL WATER TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended
-----------------------------
June 30, 2000 June 30, 1999
------------- -------------
<S> <C> <C>
Net revenues:
United States $ 13,672,635 $ 24,583,374
International 223,158 728,230
------------ ------------
Total revenues 13,895,793 25,311,604
------------ ------------
Costs and expenses:
Cost of sales 12,512,492 23,446,691
Selling, general and administrative 2,186,439 1,303,054
Research and development 87,623 12,883
------------ ------------
Total costs and expenses 14,786,554 24,762,628
------------ ------------
Operating income (loss) (890,761) 548,976
Other income (expense):
Interest expense, net (84,780) (48,438)
Other, net 14,278 2,802
------------ ------------
Income (loss) before income taxes (961,263) 503,340
Income taxes (benefit) (344,294) 130,980
------------ ------------
Net income (loss) before preferred dividend (616,969) 372,360
Preferred stock dividend 3,000 4,999
------------ ------------
Net income (loss) for common stockholders $ (619,969) $ 367,361
============ ============
Income (loss) per share:
Basic weighted average shares outstanding 5,989,913 4,914,238
Basic income (loss) per share available for common $ (0.104) $ 0.075
============ ============
Fully diluted weighted average shares outstanding 5,989,913 4,914,587
Fully diluted income (loss) per share $ (0.104) $ 0.075
============ ============
</TABLE>
The accompanying notes are an integral part of these
financial statements.
3
<PAGE>
GLOBAL WATER TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
-----------------------------
June 30, 2000 June 30, 1999
------------- -------------
<S> <C> <C>
Net revenue:
United States $ 27,127,271 $ 38,465,487
International 1,013,876 874,988
------------ ------------
Total revenues 28,141,147 39,340,475
------------ ------------
Costs and expenses:
Cost of sales 24,729,987 35,495,665
Selling, general and administrative 4,333,529 2,353,464
Research and development 91,648 18,613
------------ ------------
Total costs and expenses 29,155,164 37,867,742
------------ ------------
Operating income (loss) (1,014,017) 1,472,733
Other income (expense):
Interest expense, net (198,950) (137,040)
Other, net 1,200 2,802
------------ ------------
Income (loss) before income taxes (1,211,767) 1,338,495
Income taxes (benefit) (429,464) 414,933
------------ ------------
Net income (loss) before preferred dividend (782,303) 923,562
Preferred stock dividend 8,000 10,000
------------ ------------
Net income (loss) available for common stockholders $ (790,303) $ 913,562
============ ============
Income (loss) per share:
Basic weighted average shares outstanding 5,636,292 4,914,238
Basic income (loss) per share $ (0.140) $ 0.186
============ ============
Fully diluted weighted average shares outstanding 5,636,292 4,951,001
Fully diluted income (loss) per share $ (0.140) $ 0.185
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE>
GLOBAL WATER TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
June 30, 2000 December 31, 1999
------------- -----------------
(Unaudited)
<S> <C> <C>
ASSETS
------
Current assets:
Cash and cash equivalents $ 97,852 $ 707,264
Accounts receivable, net of allowance for doubtful
accounts of $169,159 and $136,029, respectively 11,401,549 11,569,520
Costs and estimated earnings in excess of billings
on uncompleted contracts 16,284,557 10,968,967
Other current assets 1,760,690 1,167,561
------------ ------------
Total current assets 29,544,648 24,413,312
------------ ------------
Other assets 1,081,776 850,618
------------ ------------
$ 30,626,424 $ 25,263,930
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Current maturities of long-term debt $ 3,484,012 $ 1,935,394
Accounts payable 19,089,843 13,718,901
Other current liabilities 2,501,899 3,818,681
------------ ------------
Total current liabilities 25,075,754 19,472,976
------------ ------------
Long-term debt 388,078 1,989,390
Other liabilities 23,218 55,368
Stockholders' equity:
Preferred stock, $0.00001 par value, 20,000,000 shares
authorized:
- Series A; 1,000,000 shares authorized issued,
outstanding at December 31, 1999 only;
stated at redemption value of $0.0001 - 100
- Series B; 1,000 shares authorized, 150 and
250 issued and outstanding respectively; stated at
redemption value of $1,000 150,000 250,000
- Series C; 876,341 shares authorized, issued
and outstanding; at June 30, 2000 only;
no par; no redemption value - -
Common stock, $0.0006 par value; 13,333,333 shares
authorized; 5,989,913 and 5,139,238 shares
issued and outstanding, respectively 3,594 3,083
Capital in excess of par value 3,787,278 1,504,208
Retained earnings 1,198,502 1,988,805
------------ ------------
Total stockholders' equity 5,139,374 3,746,196
------------ ------------
$ 30,626,424 $ 25,263,930
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
GLOBAL WATER TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended
-----------------------------
June 30, 2000 June 30, 1999
------------- -------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ (790,303) $ 913,562
Adjustments to reconcile net income (loss) to
net cash provided (used) by operating activities:
Depreciation 115,545 107,592
Amortization 5,259 5,502
Deferred income taxes (32,150) -
(Increase) decrease in working capital:
Trade accounts receivable 199,740 (6,586,191)
Other receivables (31,769) (507,743)
Net costs in excess of billings and
billings in excess of cost (5,769,640) (7,546,752)
Inventories (338,669) (308,474)
Prepaid expenses (200,974) (286,012)
Deposits (1,930) 54,465
Accounts payable 5,370,942 13,092,033
Income taxes (441,006) 413,152
Accrued liabilities (421,726) (311,273)
------------ ------------
Net cash (used) by operating
activities (2,336,681) (960,139)
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (403,517) (125,520)
------------ ------------
Net cash (used in) investing activities (403,517) (125,520)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change on the lines-of-credit (214,836) (267,000)
Proceeds from issuance of common stock 2,283,481 -
Redemption of preferred stock (100,000) -
Proceeds from issuance of debt 245,373 -
Repayments of debt (83,232) (114,113)
------------ ------------
Net cash provided (used) by
financing activities 2,130,786 (381,113)
------------ ------------
NET (DECREASE) IN CASH AND CASH EQUIVALENTS (609,412) (1,466,772)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 707,264 1,751,299
------------ ------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 97,852 $ 284,527
============ ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
6
<PAGE>
GLOBAL WATER TECHNOLOGIES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 31, 2000 AND 1999
1. INTERIM FINANCIAL STATEMENTS
The consolidated balance sheet as of June 30, 2000, and the related
consolidated statements of operations for the six and three months ended
June 30, 2000 and 1999, and the statements of cash flows for the six months
ended June 30, 2000 and 1999 are unaudited; in the opinion of management,
all adjustments necessary for a fair presentation of such financial
statements have been included. These financial statements and notes are
presented as permitted by Form 10-Q and should be read in conjunction with
the Company's financial statements and notes included in Form 10-KSB for
the year ended December 31, 1999.
2. STOCK OPTIONS
On March 8, 1999, the Company issued 4,798,800 stock options to employees
as part of the 1998 Stock Option Plan approved by the Company's
shareholders at its 1998 annual meeting. The options vest to employees on
a schedule of 20% immediately and 20% over each of the next four years. As
of June 30, 2000, 117,640 of the options were exercised. An additional
439,020 options were forfeited. The options can be exercised when vested,
but no later than 5 years from the issuance date.
On February 9, 2000, the Company issued 6,272,300 stock options to
employees as part of the 1998 Stock Option Plan. The options vest to
employees on a schedule of 20% immediately and 20% over each of the next
four years. As of June 30, 2000, 11,760 of the options were exercised. An
additional 112,880 options were forfeited.
Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation" defines a fair value based method of accounting
for an employee stock option or similar equity instrument. This statement
gives entities a choice of recognizing related compensation expense by
adopting the new fair value method or to continue to measure compensation
using the intrinsic value approach under Accounting Principles Board (APB)
Opinion No. 25, the former standard. If the former standard for
measurement is elected, SFAS No. 123 requires supplemental disclosure to
show the effects of using the new measurement criteria. The Company
intends to continue using the measurement prescribed by APB Opinion No. 25.
3. BUSINESS SEGMENT DATA
The Company's primary business is the design, sale, manufacture and
building of new industrial cooling towers and in retrofitting existing
industrial cooling towers and cooling tower components for both the
international and domestic markets. All of its operations are within the
7
<PAGE>
United States. Based on risks, financial resources, profitability and
internal resources consumed, management has determined that the most
relevant segment information is international and domestic transactions.
The Company's export sales were $1,013,876 and $874,988 for the six months
ended June 30, 2000 and 1999, respectively. The following schedule
summarizes the segmentation of the international and domestic business
segments for the six months ended June 30, 2000 and 1999.
BUSINESS SEGMENT STATEMENTS OF OPERATIONS
For the six months ended June 30, 2000 and 1999
<TABLE>
<CAPTION>
2000
---------------------------------------------------
DOMESTIC INTERNATIONAL OTHER TOTAL
-------- ------------- ----- -----
<S> <C> <C> <C> <C>
Revenues $27,127,271 $1,013,876 $ - $28,141,147
Costs $23,878,331 $ 851,656 $ 4,425,177 $29,155,164
Segment profit $ 3,248,940 $ 162,220 $(4,425,177) $(1,014,017)
Assets $25,417,080 $3,656,171 $ 1,553,173 $30,626,424
</TABLE>
<TABLE>
<CAPTION>
1999
---------------------------------------------------
DOMESTIC INTERNATIONAL OTHER TOTAL
-------- ------------- ----- -----
<S> <C> <C> <C> <C>
Revenues $38,456,487 $ 874,988 $ - $39,340,475
Costs $34,837,817 $ 657,848 $ 2,372,077 $37,867,742
Segment profit $ 3,627,670 $ 217,140 $(2,372,077) $ 1,472,733
Assets $16,744,392 $ 74,985 $ 2,203,680 $27,532,829
</TABLE>
4. NEW CONTRACTS AND BACKLOG
The Company has a backlog of $16,876,473 at June 30, 2000, compared to a
backlog amount of $25,544,805 for the similar period ended in 1999 and a
backlog of $20,846,108 at December 31, 1999. Backlog represents the amount
of revenue the Company expects to realize from work on uncompleted contracts.
5. STOCKHOLDERS' EQUITY
Effective June 30, 2000, the Company underwent a 1-for-60 reverse split of
its common shares. The number of authorized common shares was reduced from
800,000,000 to 13,333,333 and par value was increased from $0.00001 to
$0.0006. Unless otherwise indicated, all share and per share amounts in
these financial statements have been restated to reflect the split.
8
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
GENERAL
Global Water Technologies, Inc. (the "Company"), primarily through its
wholly owned subsidiary, Psychrometric Systems, Inc., is in the business of
designing, selling, manufacturing and building industrial cooling towers,
repairs and maintenance in the retrofit of existing industrial cooling
towers and cooling tower components for these and similar facilities. The
Company markets its products and services worldwide to the following
industries: electric power utilities; process (such as agricultural,
industrial and pharmaceutical process industries); petrochemical; chemical;
heating, ventilation and air-conditioning ("HVAC"); manufacturing; pulp &
paper and other industries utilizing cooling towers. Typical customers
include companies such as Archer Daniels Midland, Amoco, Mitsubishi, Mobil,
Texaco, Bechtel, Fluor Daniel, Inc. and other large corporations around the
world.
The Company derives revenue from the following principal sources: new
cooling tower sales, retrofits to existing cooling tower construction
repair projects, and spare parts and supplies to existing cooling tower
customers. The Company custom designs and constructs wooden, fiberglass
and concrete towers for its customer base worldwide.
The Company recognizes revenues using the percentage-of-completion
method, based primarily on contract costs incurred to date compared with
total estimated contract costs. Contracts on selected projects where there
are both repair and new tower components are segmented between the two
distinct phases and accordingly, gross margin related to each activity is
recognized as those separate phases are completed using the percentage-of-
completion method, based primarily on contract costs incurred to date
compared with total estimated contract costs. Changes to total estimated
contract costs and to contract revenues via change orders are recognized in
the period in which they are determined. In addition, a provision is made
for the entire amount of future estimated losses, if any, on contracts in
progress in the period in which such losses are determined.
THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THREE MONTHS ENDED JUNE 30, 1999
Total revenues were derived from engineering, construction, retrofits,
spare parts of cooling towers and services from both Global Water Services'
products and Applied Water Technologies' water treatment program. For the
three month period ended June 30, 2000, total tower revenue decreased 45.1%
to $13,895,793 as compared to $25,311,604 for the three month period ended
June 30, 1999. International revenues comprised 1.6% of total revenues in
2000 versus 2.9% in 1999.
The Company's cost of sales decreased 46.6% from $23,446,691 in 1999
to $12,512,492 in 2000. As a percentage of revenues, cost of sales
decreased from 92.6% in 1999 to 90.0% in 2000. Due to significant
competition, there can be no assurance that the Company can maintain its
profit margins in the future.
Selling, general and administrative expenses increased 67.8% from
$1,303,054 in 1999 to $2,186,439 in 2000. As a percentage of revenues,
these expenses increased from 5.1% in 1999 to
9
<PAGE>
15.7% in 2000. Increased personnel resources and related costs due to the
startup of the Company's two new businesses, Applied Water Technologies and
Global Water Services, was approximately $225,000 of the difference between
the two quarters. Higher costs in the areas of marketing and corporate
costs accounted for the remainder of the difference. Management believes
that current and future investments in personnel resources will have a
favorable impact on the Company and its future operating results.
Research and development costs increased to $87,623 in 2000 from
$12,883 in 1999. These costs include the research and development facility
in Idaho. During the second quarter of the current year, the Company has
preliminary indications that it has successfully passed the fire criteria
tests for Factory Mutual Research certification for a line of its cooling
tower products. This certification allows customers to forego sprinkler
system installations and may result in lower capital and operating costs
for the Company's product.
Operating income (loss), based on the explanations noted above,
decreased to ($890,761) in 2000 from income of $548,976 in 1999.
Other income and expense primarily consisted of interest expense,
which increased from $48,438 in 1999 to $84,780 in 2000, due to the
Company's various debt financings. Income taxes (benefit) decreased from
a cost of $130,980 with an effective 26.0% tax rate in 1999 to a tax
benefit of ($344,294) with an effective tax rate of 35.8% in 2000.
Net income (loss) available to common stockholders decreased from
$367,361 in the three month period ended June 30, 1999 to a net (loss) of
($619,969) in the similar period in 2000. This amount includes a preferred
stock dividend of $3,000 in 2000 and $4,999 in 1999. Basic and fully
diluted income (loss) per share was $0.075 in the three month period ended
June 30, 1999 and ($0.104) in 2000.
SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO SIX MONTHS ENDED JUNE 30, 1999
Total revenues were derived from engineering, construction, retrofits,
spare parts of cooling towers and services from both Global Water Services'
products and Applied Water Technologies' water treatment program. For the
six month period ended June 30, 2000, total tower revenue decreased 28.5%
to $28,141,147 as compared to $39,340,475 for the six month period ended
June 30, 1999. International revenues comprised 3.6% of total revenues in
2000 versus 2.2% in 1999.
Contracts awarded ("bookings") during the six month period ended June 30,
2000 decreased 36.1% from $37,825,673 to $24,171,512 in 2000. The
decrease in bookings awarded is due to a significant project awarded in
1999 that has not occurred in 2000.
The Company's cost of sales decreased 30.3% from $35,495,665 in 1999
to $24,729,987 in 2000. As a percentage of revenues, cost of sales
decreased from 90.2% in 1999 to 87.9% in 2000. The absolute increase in
cost of sales resulted primarily from a 28.5% decrease in corresponding
revenues. Due to significant competition, there can be no assurance that
the Company can maintain its profit margins in the future.
Selling, general and administrative expenses increased 84.1% from
$2,353,464 in 1999 to $4,333,529 in 200 as the Company continues to make an
investment in its future. As a percentage of revenues, these expenses
increased from 6.0% in 1999 to 15.4% in 2000. Management believes that
10
<PAGE>
the increases in selling expenses will have a positive impact on the
increase in bookings and the recognition of the related revenues for future
periods.
Research and development costs increased to $91,648 in 2000 from
$18,613 in 1999. These costs include a portion of the research and
development facility in Idaho. During the second quarter of the current
year, the Company has preliminary indications that it has successfully
passed the fire criteria tests for Factory Mutual Research certification
for a line of its cooling tower products. This certification allows
customers to forego sprinkler system installations and may result in lower
capital and operating costs for the Company's product.
Operating income (loss), based on the explanations noted above,
decreased from an income of $1,472,733 in 1999 to an operating loss of
($1,014,017) in 2000.
Other income and expense primarily consisted of interest expense.
Income taxes (benefit) decreased from a cost of $414,933 with an effective
31.0% tax rate in 1999 to a tax (benefit) of ($429,464) with an effective
tax rate of 35.4% in 2000.
Net income (loss) available for common stockholders was ($790,303) in
the six month period ended June 30, 2000 compared to a net income of
$913,562 in the similar period in 1999. Basic and fully diluted income
(loss) per share was ($0.140) in the six month period ended June 30, 2000.
Basic and fully diluted income per share was $0.186 and $0.185,
respectively, in 1999
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2000, the Company had working capital of $4,468,894
compared to working capital of $4,774,844 at June 30, 1999 and working
capital of $4,940,336 at December 31, 1999. The Company's cash flow
provided by and used in its operating, investing and financing activities
during the first six months of 2000 and 1999 are as follows:
2000 1999
---- ----
Operating activities $ (2,336,681) $ (960,139)
Investing activities (403,517) (125,520)
Financing activities 2,130,786 (381,113)
------------ ------------
Net (decrease) in cash
and cash equivalents $ (609,412) $ (1,466,772)
============ ============
The Company's capital requirements for its continuing operations
consists of its general working capital needs, scheduled payments on its
debt obligations, new business opportunities and capital expenditures.
Management anticipates that due to the growth in sales volume and
contracted advanced payments from projects, the Company's operating
activities will provide a cash increase during the remainder of the year.
Management believes that its current debt facilities and/or possible
capital market funding will be sufficient for its operational cash
investment requirements during the next four quarters.
At June 30, 2000, net costs in excess of billings and estimated
earnings on uncompleted contracts were $15,433,744 as compared to net costs
in excess of billings and estimated earnings on uncompleted contracts of
$9,484,122 at June 30, 1999 and $9,664,104 at December 31, 1999.
11
<PAGE>
This net increase is primarily due to contracted payment terms, project
delays and timing of billings. Management expects this net investment to
decrease over the next two quarters.
Budgeted capital expenditures during the remainder of the year consist
of ongoing amounts for computer equipment, software, vehicles and office
equipment for anticipated growth.
The Company has a line of credit with a commercial lender totaling
$2,300,000 to finance its working capital needs. This is partially secured
by a stockholder's certificates of deposit. As of June 30, 2000,
$1,547,065 was outstanding on this line of credit. A portion of the line
($500,000) matures in September, 2000 and the balance matures on January
15, 2001. Management expects that this line of credit will be refinanced
into a long-term obligation when the obligation becomes due. The interest
rate on the note is tiered as follows: 6.69% on the first $770,000 and
10.5% on the remaining portion. In addition to the interest rate stated,
the Company pays the above noted stockholder additional interest of $8,131
per month on his certificates of deposit securing the above mentioned
Company notes.
The Company also has a line of credit with a commercial lender
totaling $2,000,000 to finance its working capital needs on foreign
projects. This line of credit is guaranteed by the Export Import Bank of
the United States and subjects the Company to certain financial covenants
including minimum net worth requirements. The line of credit bears
interest at prime plus 1% and matures on September 15, 2000. As of June 30,
2000, there was an outstanding balance of $1,768,100 on this line of
credit. Management expects that the line will be renewed when it comes due.
The Company has a term loan secured by the Small Business
Administration with an outstanding balance at June 30, 2000 of $272,111.
Scheduled principal payment on this note is $96,369 over the next twelve
months and interest rates are stated at one percent over prime. The Company
has various term notes secured by Company vehicles. The outstanding
balance on these notes at June 30, 2000 was $284,814 with scheduled
principal payments over the next twelve months of $72,478 with interest
rates ranging from 9.5% to 10.75%.
Management believes that the Company will have sufficient capital
resources to fund its ordinary capital requirements for at least the next
four quarters for continuing operations. No assurance can be made that the
Company will have sufficient working capital to continue its requirements
for continuing operations beyond the next four quarters.
FORWARD LOOKING STATEMENTS
Statements of the Company's or management's intentions, beliefs,
anticipations, expectations and similar expressions concerning future
events contained in this document constitute "forward looking statements"
as defined in the Private Securities Litigation Reform Act of 1995. As
with any future event, there can be no assurance that the events described
in forward looking statements made in this report will occur or that the
results of future events will not vary materially from those described in
the forward looking statements made in this report.
12
<PAGE>
Important factors that could cause the Company's actual performance and
operating results to differ materially from the forward looking statements
include, but are not limited to, changes in the general level of economic
activity in the markets served by the company, competition in the cooling
tower industry and other industries where the Company markets its products
and the introduction of new products by competitors in those industries,
delays in refining the Company's manufacturing and construction techniques,
cost overruns on particular projects, availability of capital sufficient to
support the Company's level of activity and the ability of the Company to
implement its business strategy.
13
<PAGE>
PART II - OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
During the three months ended June 30, 2000, the Company received
$482,443 from the exercise of outstanding options, warrants and
employee stock options. All amounts were used for working capital and
for funding Applied Water Technologies and Global Water Services, the
Company's two new businesses. The exercise of the options and
warrants are deemed exempt from the registration requirements pursuant
to Sections 4(2) or 4(6) of the Securities Act of 1933, as amended,
and Regulation D adopted thereunder.
On May 30, 2000, the Company announced a 1-for-60 reverse stock split
effective June 30, 2000.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The annual meeting of shareholders of the Company was held on June 28,
2000 at 10:00 a.m. at the Company's principal offices in Golden,
Colorado. A total of 347,452,331 shares of Common Stock (5,790,873 on
an adjusted basis), which was 96.7% of the shares outstanding on May 26,
2000, were represented at the meeting, either in person or by
proxy. The only proposal submitted to the shareholders was the
election of the Company's Board of Directors. The following directors
were elected to serve until the next annual meeting of shareholders
and until their successors have been elected and qualified:
NOMINEE FOR WITHHELD
------- --- --------
George A. Kast 347,462,431 169,217
Gary L. Brown 347,462,431 169,217
Michael A. Kast 347,462,431 169,217
Robert L. Koch 347,462,431 169,217
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits required by Item 601 of Regulation S-X are
filed herewith:
Exhibit No. Description
----------- -----------
14
<PAGE>
27 Financial Data Schedule
(b) During the three months ended June 30, 2000, the Company filed
Current Reports on Form 8-K as follows:
(i) Form 8-K dated May 30, 2000 announcing a reverse stock split
of 1-for-60 under Item 5.
15
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GLOBAL WATER TECHNOLOGIES, INC.
Date: August 14, 2000 By: /s/ George A. Kast
----------------------------------
George A. Kast
Chief Executive Officer
and Chairman of the Board
Date: August 14, 2000 By: /s/ Martin Hout
----------------------------------
Martin Hout
Chief Financial Officer
16
